New regulations extend the date for commercial lenders and some suppliers to join an EDR scheme to 12 March 2015. This is welcome news for these businesses.
Before this amendment, commercial lenders and trade suppliers were required to join an external dispute resolution scheme (EDR) approved by the Privacy Commissioner in order to be able to obtain credit reports after 12 March 2014. This is the date on which substantial amendments to the Privacy Act commence, including the introduction of positive credit reporting and new rules about accessing credit reports.
The Privacy Amendment (External Dispute Resolution Scheme-Transitional) Regulation 2014 exempt entities that engage in the:
- retail sale of electricity, gas, water, sewerage, or drainage services; or
- provision of commercial credit
from the requirement to be a member of an EDR until 12 March 2015.
During the extension period, discussions will continue for a permanent exemption for some businesses, and possibly a privacy only EDR scheme will be established to provide an EDR for businesses who do not participate in industries covered by existing EDR schemes.
What types of businesses are affected by this extension?
Commercial credit is any kind of finance that is not regulated consumer credit. There are many commercial financiers who are not members of an EDR as they are not required to be under the NCCP Act. Examples include equipment financiers, who only provide unregulated loans and leases.
However, the Privacy Act adopts a broader definition of credit than the National Credit Code and includes when suppliers of goods or services allow customers more than seven days to pay.
For example, a hardware store which allows its customers time to pay is a credit provider for the purposes of the Privacy Act, but not the NCCP Act. Prior to this exemption for 12 months, the hardware store would need to have been a member of an EDR scheme before it could obtain a credit report after 12 March 2014.
There are obviously many businesses that provide credit to their customers and require sighting a credit report before doing so. The regulation only exempts suppliers dealing with purchasers that are not consumers. The extension in relation to consumers is limited to suppliers of electricity, gas, water, sewerage, or drainage services. So, for example, phone companies will need to join an EDR before they can obtain credit reports on their customers who are consumers (ie other than companies and business customers).